Daily Rate Update: February 3rd-7th

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Friday – February 7, 2020

And the survey says … 225K jobs created in January, well above the 164K expected while November and December were revised slightly higher by a total of 7K, reports the Bureau of Labor Statistics. The Unemployment Rate inched higher to 3.6% from 3.5%. As more people entered the workforce, the Labor Force Participation Rate rose to 63.4%, the highest since June 2013. The three-month job growth average was a solid 211K.

Within the data, it showed that the U6 number, a measure of total unemployed, ticked up to 6.9%, just above the all-time series low of 6.7% hit in December. Average hourly earnings rose 0.2% month over month with a 3.1% year over year gain. There was one slightly negative data point as the report showed downward revisions of 514,000 for the year ended March 2019 for Non-Farm Payrolls, a bit higher than the 500K expected. Overall, a very strong report.

The low mortgage rate environment has made 11.3 million mortgages refi-eligible, the second-highest on record, reports Black Knight. The 11.3 million is made up of those borrowers paying interest rates that are 0.75% or higher than current rates who also have credit scores above 720 and enough equity in homes to get a loan. In the absence of credit scores and equity, there are 22 million mortgage holders with a loan rate of more than 0.75%, or in the money, also the second-highest on record.

Courtesy of Mortgage Market Guide

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Thursday – February 6, 2020

Mortgage rates continued to decline in the latest survey from Freddie Mac hitting the lowest point in three years. The 30-year fixed-rate mortgage fell to 3.45% from 3.51% with 0.7 in points and fees. A year ago at this time, the rate averaged 4.41%. Sam Khater, Freddie Mac’s Chief Economist said, “The combination of very low mortgage rates, a strong economy and more positive financial market sentiment all point to home purchase demand continuing to rise over the next few months.”

Americans filing for first-time unemployment benefits fell to a nine-month low in the latest week and are hovering near 50-year lows. The numbers signal that the tight labor market would continue to bolster the economy in 2020. Weekly Initial Jobless Claims fell to 202,000, down 15,000 for the week ended February 1. The four-week moving average of initial claims, which irons out seasonal abnormalities, dropped 3,000 to 211,750 last week, also the lowest level since last April.

Courtesy of Mortgage Market Guide

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Wednesday – February 5, 2020

The low mortgage rate environment boosted mortgage application activity in the latest week due in part to fears that China’s economy will slow driven by the spread of the coronavirus. The MBA reports that the 30-year fixed-rate mortgage fell by ten basis points to 3.71% with 0.28 in points. It was the lowest rate since October 2016. The MBA’s Market Composite Index rose 5, the Refinance Index jumped 15% though the Purchase Index fell dropped 10%. “Prospective buyers weren’t as responsive to the decline in mortgage rates – likely because of suppressed supply levels. Purchase applications took a step back, but still remained 11% higher than a year ago,” said Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting.

The service sector of the U.S. economy continues to hum along as the outlook remains favorable for 2020. The ISM Service Index came in at 55.5 in January, the highest level since August and grew for the 120th consecutive month. A reading above 50 indicates the non-manufacturing sector economy is generally expanding; below 50 indicates the non-manufacturing sector is generally contracting. Most respondents to the survey said the outlook remains favorable for growth in 2020.

Private job growth surged in January and was the best monthly gain in nearly five years. ADP Private Payrolls surged by 291,000 last month, well above the 160,000 expected. Private job growth was robust across a large portion of industries. The 291,000 was the best monthly gain since May 2015. “The labor market experienced expanded payrolls in January. Job creation was strong among midsized companies, though small companies enjoyed the strongest performance in the last 18 months,” said Ahu Yildirmaz, vice president and cohead of the ADP Research Institute.

Courtesy of Mortgage Market Guide

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Tuesday – February 4, 2020

CoreLogic reports that home prices nationwide, including distressed sales, rose 4% in December 2019 compared with December 2018 and increased 0.3% in December 2019 compared with November 2019. Looking ahead, CoreLogic is forecasting that home prices will rise 5.2% year-over-year from December 2019 to December 2020. “On a national level, home prices are on an upswing. Price growth is likely to accelerate in 2020,” said Frank Martell President and CEO of CoreLogic. The strong labor market will continue to support the housing sector.

U.S. stocks are rallying today shrugging off the coronavirus fears as investors use the “buy on the dip” strategy after the recent decline. The Dow Jones Industrial Average is up 450 points and comes after Friday’s plunge and yesterday’s rebound. The rise in equity prices is weighing on the bond markets while mortgage rates could edge higher though they remain historically low. Freddie Mac reported last week that the 30-year fixed-rate mortgage fell to 3.51%, the second-lowest level in three years.

U.S. consumers are paying less for the price of gasoline at the pumps due in part to a decline in oil prices. The decline in the price of oil is due in part to the recent coronavirus headlines that could cut demand while OPEC is mulling over supply cuts. The national average price for a regular gallon of gasoline is at $2.46, down from $2.58 a month though above the $2.25 a gallon seen last year this time. “Gas prices are pushing cheaper for two reasons. Crude oil prices are $10 less a barrel than one month ago and U.S. gasoline stocks sit at an all-time record high,” said Jeanette Casselano, AAA spokesperson.

Courtesy of Mortgage Market Guide

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Monday – February 3, 2020

The U.S. manufacturing sector received positive news this morning as it has been in a somewhat mild recession for the past six or seven months, reports the Institute for Supply Management (ISM). The ISM Manufacturing Index rose to 50.9 last month, above the 48.1 expected and up from 47.8 in December. It was the first expansion for the index since last July where 50 is the dividing line between expansion and contraction. “Overall, sentiment this month is moderately positive regarding near-term growth,” said ISM spokesperson Timothy R. Fiore.

Two key labor market reports will be released this week with the ADP Private Payrolls Report on Wednesday followed by the government’s Jobs Report on Friday. The government report includes Non-Farm Payrolls and the Unemployment Rate. In addition, earnings season continues with some big names yet to report this week, Google reports after the close today. Of the 126 S&P 500 companies that have reported quarterly results so far, 70% have topped earnings estimates.

Courtesy of Mortgage Market Guide

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